• UGI USER
  • Jul 30, 2024
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REVAMPING NITI AAYOG: ADDRESSING TO PROMOTE COOPERATIVE FEDERALISM IN INDIA”

Syllabus:

  • GS-2- NITI Aayog , Planning Commission , Efforts for good and ethical administration

Focus :

  • The article focuses on the structural and functional issues of the NITI Aayog, highlighting its limited resource allocation powers, the unintended consequences of competitive federalism, and the lack of meaningful consultations with States. It examines the political and developmental implications of these issues and suggests measures to enhance the effectiveness of NITI Aayog in promoting cooperative federalism.
Source - IE

Introduction

  • The NITI Aayog, India’s premier policy think tank, was established to replace the Planning Commission with a focus on “cooperative federalism.”
  • Recent events, including the boycott of the ninth Governing Council meeting by several Chief Ministers, have raised questions about its efficacy and role.
  • This article explores the structural and functional issues of the NITI Aayog and the implications for India’s federal structure.

Historical Context of NITI Aayog

  • The NITI Aayog was constituted by the NDA government during its first term to replace the Planning Commission, which was criticized for its “top-down” approach.
  • The Planning Commission had significant powers, including the allocation of resources and grants to States, and allowed for extensive consultations with State governments.
  • The objective of NITI Aayog was to foster a more cooperative federal structure by providing a platform for collaboration between the Centre and States.

Structural and Functional Issues

Lack of Resource Allocation Powers

  • Unlike the Planning Commission, the NITI Aayog does not have powers to allocate resources or grants to States, limiting its influence and efficacy.
  • The Finance Ministry retains control over resource distribution, leading to perceptions of favoritism and unequal treatment of States.
  • States have raised concerns about the perceived bias in the allocation of funds and projects, particularly those ruled by opposition parties.

Focus on Indices and Competitive Federalism

  • NITI Aayog has emphasized the creation of indices to evaluate the performance of States, promoting a form of “competitive federalism.”
  • This approach has led to unintended consequences, such as competition rather than cooperation among States.
  • States argue that the emphasis on indices does not adequately address the unique developmental needs and challenges faced by individual States.

Limited Consultations with States

  • The abolition of the Planning Commission has resulted in fewer consultations between the Centre and States regarding grants and projects.
  • This has led to dissatisfaction among States, particularly those ruled by opposition parties, who feel excluded from important decision-making processes.
  • The walkout by West Bengal Chief Minister Mamata Banerjee during the Governing Council meeting highlights the growing discontent among States.
Difference Between NITI Aayog and

Planning Commission

Origin and Establishment

Planning Commission:

  • Established: March 15, 1950
  • Objective: To promote a rapid increase in the living standard of the people by efficient exploitation of resources, increasing production, and offering employment opportunities.
  • Abolished: August 17, 2014

NITI Aayog:

  • Established: January 1, 2015
  • Objective: To achieve sustainable development goals and to enhance cooperative federalism by fostering the involvement of State Governments in the economic policy-making process.

Structure and Composition

Planning Commission:

  • Head: Prime Minister of India
  • Members: Full-time members including a Deputy Chairman, who had the rank of a Cabinet Minister.
  • Functioning: Centralized body with a top-down approach.

NITI Aayog:

  • Head: Prime Minister of India
  • Members:Full-time members, part-time members, and ex-officio members from the Union Council of Ministers. Also includes a Vice-Chairperson and Chief Executive Officer (CEO).
  • Functioning: Decentralized body with a bottom-up approach, emphasizing collaboration with States.

Role and Functions

Planning Commission:

  • Resource Allocation: Had the authority to allocate funds to Central Ministries and State Governments.
  • Five-Year Plans: Formulated detailed Five-Year Plans outlining the country’s economic development strategy.
  • Sectoral Planning: Focused on sector-specific planning and development.

NITI Aayog:

  • Advisory Role: Acts as an advisory body to the Central and State Governments.
  • Policy Formulation: Develops strategic and long-term policies and programs and provides technical advice.
  • Cooperative Federalism: Promotes cooperative federalism by involving States in policy-making and fostering competition among them.
  • Initiatives: Focuses on creating indices to evaluate State performance and encourages best practices through competitive federalism.

Approach and Philosophy

Planning Commission:

  • Top-Down Approach: Centralized planning and decision-making, with States having limited input.
  • Socialistic Orientation: Emphasized a controlled economy with significant government intervention in resource allocation and planning.

NITI Aayog:

  • Bottom-Up Approach: Decentralized planning, encouraging State participation and feedback.
  • Market-Oriented: Focuses on market-based solutions, private sector involvement, and public-private partnerships.

Financial Powers

Planning Commission:

  • Financial Control: Had significant control over the distribution of funds and grants to various sectors and States.
  • Plan and Non-Plan Expenditure: Classified government expenditure into Plan (developmental) and Non-Plan (administrative) categories.

NITI Aayog:

  • Advisory Role: Does not have the power to allocate funds or grants; these functions are now under the purview of the Finance Ministry.
  • Focus on Strategy: Concentrates on policy formulation, strategic planning, and performance monitoring rather than financial control.

Interaction with States Planning Commission:

  • Limited State Involvement: States had a consultative role but limited influence over the planning and resource allocation process.
  • Centralized Decision-Making: Decisions were predominantly made at the central level, with States often implementing centrally devised plans.

NITI Aayog:

  • State Involvement: Encourages active participation of States through the Governing Council, which includes Chief Ministers and Lt. Governors.
  • Cooperative and Competitive Federalism: Fosters a spirit of cooperative federalism through collaboration and competitive federalism by ranking States on performance indices.

Focus Areas

Planning Commission:

  • Five-Year Plans: Focused on achieving targets set in the Five-Year Plans, with an emphasis on industrialization and economic growth.
  • Sectoral Development: Emphasized sector-specific strategies and resource allocation.

NITI Aayog:

  • Sustainable Development Goals (SDGs): Aligns its initiatives with the United Nations SDGs.
  • Innovation and Technology: Promotes innovation, technology adoption, and data-driven governance.
  • Holistic Development: Focuses on inclusive and sustainable development, covering various socio-economic aspects.

Political Implications

Boycott of Governing Council Meeting

  • The ninth Governing Council meeting of the NITI Aayog saw the absence of representatives from ten States and Union Territories, with seven boycotting it altogether.
  • Chief Ministers from Tamil Nadu, Kerala, Karnataka, Telangana, Punjab, Himachal Pradesh, and Jharkhand cited concerns over inadequate allocations and projects in the Union Budget.
  • The boycott reflects broader political tensions and dissatisfaction with the NITI Aayog’s role and functioning.

Allegations of Favoritism

  • Opposition-ruled States have accused the Centre of favoring BJP-ruled States for investment projects and grants, undermining the principle of cooperative federalism.
  • The BJP’s campaign strategy of promising “double engine” governments, where the same party rules both the Centre and the State, has intensified these allegations.
  • The support of parties ruling Bihar and Andhra Pradesh, which suffer from developmental deficits, and the Finance Minister’s explicit commitment to addressing their demands in the Budget, have fueled these perceptions.

Economic and Developmental Impact

Need for Institutional Backing

  • The focus on macro-economic stability and the financial system by the Finance Ministry, while important, does not fully address the need for infrastructure and capital investments in States.
  • There is a growing recognition of the need for an institutional mechanism to support growth through targeted investments and projects at the State level.
  • The NITI Aayog, with its current advisory role, lacks the authority and capacity to fulfill this critical function.

Role of the Finance Commission

  • The 16th Finance Commission is tasked with addressing horizontal imbalances among States, but its mandate is limited to financial allocations rather than developmental planning.
  • There is a need for a more holistic approach that combines financial stability with developmental planning to ensure balanced and inclusive growth across all States.

Recommendations for Re-envisioning NITI Aayog

Restoring Consultative Mechanisms

  • Re-establishing regular and meaningful consultations between the Centre and States is essential to address the concerns of States and promote cooperative federalism.
  • The NITI Aayog should facilitate these consultations, ensuring that the voices of all States are heard and considered in decision-making processes.

Enhancing Resource Allocation Powers

  • Granting NITI Aayog limited powers to recommend or influence resource allocation and project approvals could enhance its effectiveness and credibility.
  • This would require a clear and transparent framework to ensure that allocations are based on objective criteria and developmental needs rather than political considerations.

Strengthening Cooperative Federalism

  • Emphasizing cooperative rather than competitive federalism can foster collaboration and mutual support among States.
  • The NITI Aayog should focus on creating platforms for knowledge sharing, best practices, and collaborative projects that address common challenges faced by States.

Addressing Regional Disparities

  • Special attention should be given to addressing regional disparities and developmental deficits in States with significant challenges.
  • Tailored policies and programs that consider the unique needs and contexts of different States can promote more balanced and equitable development.

Conclusion

  • The NITI Aayog was envisioned as a catalyst for cooperative federalism, but structural and functional limitations have hindered its effectiveness.
  • Addressing the concerns of States and restoring their confidence in the institution is critical for promoting inclusive growth and development.
  • Re-envisioning the NITI Aayog with enhanced consultative mechanisms, resource allocation powers, and a focus on cooperative federalism can help achieve its intended goals and strengthen India’s federal structure.

Mains UPSC Question

“Discuss the persistent gender gap in the economic sphere, highlighting its historical roots and current state. Examine the economic benefits of bridging this gap and outline effective strategies for achieving gender equality in the workforce. Illustrate your answer with relevant case studies and examples of successful initiatives.”(250 words)

Associated Article –

https://universalinstitutions.com/niti-aayog-has-transformed-the-developmental-approach-in-the-country-from-planning-to-strategizing-and-from-top-down-to-bottom-up-policy-making-discuss-the-statement-with-relevant-examples/